FINANCE BILL.—(No. 190.)

HC Deb 05 June 1894 vol 25 cc434-92

COMMITTEE. [Progress, 4th June.]

[SIXTH NIGHT.]

Bill considered in Committee.

(In the Committee.)

Clause 2.

*MR. BYRNE (Essex, Walthamstow)

said, he had the following Amendment on the Paper: —Clause 2, page 2, line 5, after "following," to insert "when situate within the United Kingdom." He had intended this as a drafting Amendment. The effect of it, with another Amendment to be moved subsequently, would be to make it clear that the property out of the country to be charged with Estate Duty was property liable to Legacy or Succession Duty. He did not desire to press the Amendment—in fact, he would mot move it, because there were similar Amendments on the Paper in the names of other Members, and it was possible that those hon. Gentlemen attached different meanings to their proposals.

SIR G. BADEN-POWELL (Liverpool, Kirkdale)

If the hon. Member moves his Amendment, shall I be in Order in moving the same Amendment afterwards for a totally different reason?

THE CHAIRMAN

No.

MR. BARTLEY (Islington, N.)

said, he had an Amendment on the Paper to the same effect as that of the hon. Member for Walthamstow. It seemed to him that the clause was not sufficiently clear to show the difference between property situated within the United Kingdom and property situated outside it.

MR. A. J. BALFOUR (Manchester, E.)

said, the Amendment of the hon. Member for Walthamstow was a drafting Amendment. Would the fact of its not being moved preclude another Member from moving it as a substantial Amendment?

*THE CHAIRMAN

The Amendment can only be put from the Chair, and either accepted or rejected once, but hon. Members can support it for any reason they like when put.

SIR R. WEBSTER (Isle of Wight)

said, it would be an improvement if the first four sub-sections of the clause were prefaced by the words "As to the property in the United Kingdom." The advantage of that would be felt when they came to deal with Sub-section 5, which related to property outside the United Kingdom.

SIR W. HARCOURT

said, the Government themselves proposed to move an Amendment to prevent ambiguity. After the first four sub-sections they proposed to leave out the word "such," before "property," so that it might not be supposed that in the subsequent subsection the same class of property was dealt with as that referred to in the first four sub-sections.

SIR G. BADEN-POWELL

rose to move, in page 2, line 5, after "following," to insert "situate in the United Kingdom." He said that there were very grave interests involved in this country and in other parts of the world which naturally reacted on one another, and unless they could at the very beginning insert in this Finance Bill some terms to confine their action to property situated within the United Kingdom very grave evils would follow, and among the gravest would be this: that the Chancellor of the Exchequer and the Revenue of this country would not benefit in anything like the degree—if it benefited at ail— which was estimated by the Chancellor of the Exchequer. He should place before the Committee one or two considerations which he thought the Chancellor of the Exchequer would admit were deserving of the greatest respect and attention.

Amendment proposed, in page 2, line 5, after the word "following," to insert the words "situate in the United Kingdom."—(Sir G. Baden-Powell.)

Question proposed, "That those words be there inserted."

SIR W. HARCOURT (interposing)

said, they had had the question discussed and decided upon, as to whether the Estate Duty should or should not be applied in regard to property out of the United Kingdom; and it could not be again raised upon this Amendment, which was a drafting Amendment to clear up the clause. A decision had been taken on the question whether the Estate Duties should or should not apply to property outside the United Kingdom, and he ventured to say that no Amendment could now be moved which had the object of declaring that property should be excluded from the operations of the Bill that was outside the United Kingdom. He pointed out at the time this question was raised that it could be more properly raised on Clause 2, but hon. Gentlemen opposite discussed it on Clause 1, and made this proposal upon it, which was negatived without a Division. He was sorry the hon. Member was not able to be present, but they argued it for several hours in this House; it was the last Amendment put from the Chair on Thursday night, and it was negatived without a Division. Such being the facts of the case, and after that decision of the House, he ventured to say that the question could not now be raised in any Amendment as to whether property out of the United Kingdom should or should not be liable to pay these duties.

MR. GOSCHEN (St. George's, Hanover Square)

said, his recollection was not that this matter of the duty, as it related to property out of the United Kingdom, had been negatived.

THE CHAIRMAN

Yes, it has. The Amendment was after the word "property" to insert "capable of being dealt with in the United Kingdom," so as to restrict it to the United Kingdom. If that is so, and I think it is so, then I think this Amendment, if it had been merely a drafting Amendment followed by others, would have been in Order, but, as it is, I think it is out of Order.

MR. GIBSON BOWLES,

on the point of Order, submitted that the words "capable of being dealt with in the United Kingdom" were entirely different to the words "situate in the United Kingdom," and covered other property. He would further point out that if it were out of Order to propose the words "situate in the United Kingdom," then this whole clause was out of Order, because if the clause had any import at all, it was a restrictive clause. If it was not restrictive it had no meaning whatever. Clause 1 imposed the duty upon all property whatsoever and wheresoever. Clause 2, again, if it had any meaning at all, had the meaning that it further defined the property in question, and if it defined it further, it must restrict it further. The language of the clause ran "it is to be deemed to include." The question they had to settle under the clause was what was to be included in the property that passed; that was to say, how far the restriction could be extended. The Chancellor of the Exchequer bad said that at the very end of the clause the question should be raised as to whether property in the United Kingdom was to be included or not, and the right hon. Gentleman had already told them that he proposed to vary the form in which it had been included in the clause as drafted. He submitted, therefore, on the ground that "property capable of being dealt with" was not the same as property "situate in the United Kingdom"; on the ground that this clause was entirely itself out of Order unless the Amendment now moved were in Order, and on the ground that the framers of this Bill themselves had included the question of the inclusion of property in the United Kingdom in the last part of the clause, that the Amendment now proposed was entirely in Order.

SIR W. HARCOURT

said, it was perfectly true that this clause did define certain properties included in Clause 1. It said that property passing on the death of a deceased (which was defined in Clause 1) should be deemed to include the properties following. The properties following were (a), (b), (c), and (d) subsections. These, no doubt, applied to properties in the United Kingdom. But it also stated that all property out of the United Kingdom should be included, subject to limitations and definitions. That was merely a restriction on the property which had been described under Clause I. But the question was raised upon Clause I, and decided by this House. [Mr. GIBSOX BOWLES: Not decided.] That question was raised and decided. He warned hon. Gentlemen at the time that if they raised it and decided it then they could not raise it again. It was discussed for a couple of hours, and then it was decided by the House without any Division, for the Amendment was negatived, which would have had the effect, had it been carried, of excluding property out of the United Kingdom. That was the situation. This clause was clearly not out of Order; it was a Definition Clause.

MR. GIBSON BOWLES

I said if this Amendment was out of Order, then the clause was out of Order.

SIR W. HARCOURT

said, it was a Definition Clause, and having decided in the first clause that the word "property" was to cover property outside the United Kingdom as well as inside, they were here defining and limiting property outside the United Kingdom in the manner described at page 24. That was to say they had already determined that the general word "property" did cover property outside the United Kingdom, and now at the end of the clause they were describing and defining that limit on that property in the manner so described.

SIR R. WEBSTER (Isle of Wight)

entirely agreed that they considered the general question of whether or not property outside the United Kingdom should come within the Estate Duty, but that did not quite touch the merits of the point of Order. This sub-section was proposing to define property in these words— Property of which the deceased at the time of his death was competent to dispose. Take the case of personal property or real property; it obviously came within these words. The right hon. Gentleman told them that he did not propose that the earlier sub-sections should deal with property outside the United Kingdom, therefore, he submitted it was obvious, on the right hon. Gentleman's own principle, that they must be allowed to discuss under these four sub-sections whether the words were so worded as to be wide enough to include property out of the United Kingdom.

SIR W. HARCOURT

remarked that if this was a drafting Amendment he should not have a word to say against it. It was only because the hon. Member was proceeding to discuss a question which had already been decided that he had interposed. He understood the object of the hon. and learned Member (Sir R. Webster) was very different. He did not at all dispute that it would be better drafting to put in words to make it clear that Sub-sections (a), (b), (c), and (d), were not intended to apply to property out of the United Kingdom. Upon that they did not differ. The Government preferred their own words, and they thought the alterations they proposed to make in line 24, would make it perfectly clear that it could not apply to property outside the United Kingdom, because that would be sufficiently defined and made clear, so that the ambiguity which the hon. and learned Member properly referred to would be removed. The real ambiguity arose from the word "such," and "such" here referred to (a), (b), and (c). They struck out the word "such," and the Solicitor General would move an Amendment which would make it perfectly clear that the only part of this clause which referred to foreign property at all, was the part of the clause which began at line 24. That really was the point, and there was no difference in substance.

MR. GOSCHEN

said, before the Chairman decided the point of Order he should like to ask a further question. At the end of the clause were these words: — All such property, when situated out of the United Kingdom, shall be included if it is liable to Legacy or Succession Duty or would be so liable. That was a restriction on the general proposition which the Chancellor of the Exchequer considered had been accepted by the House. He would ask if it was in Order, if this was not in conflict with the general proposition, would any further restriction that might be placed upon the taxation of foreign property be out of Order, whilst this was in Order, as an exception to the general rule which the right hon. Gentleman laid down? It appeared to him that at the end of Section I there were words which showed that, notwithstanding the vote which the House had given, all property was not included, but only property liable to Legacy or Succession Duty. Therefore, he would submit that if it was not in Order in this particular place it would be in Order hereafter to impose any such limitations as the Committee might think right on the imposition of property situate in the Colonies. When the question arose the previous night with regard to Clause 1 whether they should vote against the clause particularly in reference to what was proposed by the Member for the University of London, the Chancellor of the Exchequer did not himself suggest that it was on Clause 1 but upon Clause 2 that the objects aimed at by his right hon. Friend could be dealt with, and when they refused to divide against the clause they were under the impression that it was a matter that might be raised upon Clause 2.

SIR W. HARCOURT

said, there was clearly no difference between the two sides of the House. His point was that it was not open now to say that no property abroad should be subject to this duty, but it was open to add further limitations. The limitation which the Government had proposed was that only such property should be included as was liable to Succession and Legacy Duty. If hon. Members thought further restrictions should be imposed they could discuss them. That was the position of the matter. He did not dispute that at the end of the clause they might impose further limitations.

*THE CHAIRMAN

said, that the general question having been settled it could not be again raised. But, at the same time, in answer to the question put to him by the right hon. Member for St. St. George's, he thought the right hon. Gentleman was right in suggesting—and he understood the Chancellor of the Exchequer to agree with him in the suggestion—that it was quite possible to modify the propositions upon the latter end of the clause; but the general proposition which had already been decided was no longer open.

SIR R. WEBSTER

Does the right hon. Gentleman propose at this or a later stage to put words at the commencement of the clause which will show that the first four sub-sections are intended to apply to the United Kingdom?

SIR W. HARCOURT

We really mean that if you will leave it in our hands.

Amendment, by leave, withdrawn.

*MR. BYRNE

rose to move, in page 2, line 6, to leave out the words "of which the deceased was at the time of his death competent to dispose," and insert the words— to which the deceased was at the time of his death absolutely entitled, whether in possession or not, or which he had a general power to appoint by will or (being money) to charge, whether by deed or will, or any property provided, and, so far as such powers shall have been respectively exercised but not otherwise, or to which, being real estate, he was at the time of his death entitled for an estate tail in possession, or for a base fee continuing after his death. He said, he thought that the Amendment was considerably clearer than the words appearing in Clause 2 of the Bill, as drawn. The first kind of property which was to be included under the term of property passing on the death of a deceased, was property of which the deceased at the time of his death was competent to dispose. Suppose these words stood alone without explanation on the face of the Bill, anybody would admit they were far too wide. There were many kinds of property a man could dispose of in which he had really himself no property. He knew the difficulty the drafters of a Bill of this kind would have when they tried to define property that passed on the death of a deceased. The first item was the property of which the deceased was at the time of his death competent to dispose. They had to look somewhere else to see what was meant by that, and he found that the Interpretation Clause made things more confounded than ever. Having regard to the Interpretation Clause, and to the words in this clause, it was clear that a good many items of property were included which it could not possibly be intended to include. In the first place, it would include all property in which the deceased had no property himself, but had only the right of disposition, as, for instance, a purely fiduciary power, or quasi-fiduciary power. Suppose he was tenant for life under the Settled Land Act, there was power to dispose of the property, but it was not, of course, intended to include such cases. Suppose he was trustee with power of sale—fiduciary power—that would be included in these words. Suppose he was a mortgagee with power of sale. Upon his death this would be considered property of which he was capable of disposing, and, therefore, property passing at his death and upon which duty was payable. He could suggest other instances to show that the words of the clause were far too wide. Generally, property over which a deceased person had had a power of sale, but in which he had no financial interest whatever, would be included. He had done his best to frame a clause which would include every item of property which could be reasonably considered property of which the deceased was competent to dispose, which passed at his death, and which might fairly be included for the purposes of duty. He begged to move the Amendment.

Amendment proposed, in page 2, line 6, to leave out the words "of which the deceased was at the time of his death competent to dispose," and insert the words— to which the deceased was at the time of his death absolutely entitled, whether in possession or not, or which he had a general power to appoint by will or (being money) to charge, whether by deed or will, on any property provided, and, so far as such powers shall have been respectively exercised but not otherwise, or to which, being real estate, he was at the time of his death entitled for an estate tail in possession, or for a base fee continuing after his death.

Question proposed, "That the words proposed to be left out stand part of the Clause."

THE SOLICITOR GENERAL (Mr. R. T. REID,&c.) Dumfries,

said, that the Amendment would introduce into the clause esoteric mysteries of real estate. The substance of the proposal of the Bill itself was that property passing on death should include all properties of which the deceased was competent to dispose at his death, such as, for instance, money at his bankers. Another form of property consisted of a power to appoint property to oneself. For example, where a man had £1,000 at the bank which was not his own money, but which he might be in a position to appropriate to himself at any moment. What the Government said was that if a man at the time of death had power by a stroke of the pen to transfer to his own credit this £1,000, it must be treated as property passing at the man's death, although he had not in fact exercised the power of transferring the money to his credit. If such property were excluded from the operation of the clause the effect would be to facilitate greatly the plans of persons who might wish to evade the payment of Estate Duty. Coming to the Amendment the hon. and learned Gentleman opposite, unwilling to leave the responsibility of drafting the clauses with the Government, and more ambitious than they, sought to enumerate every possible case in which a man might be deemed competent to dispose of property. They had been reminded that there were a number of professional gentlemen who saw a prospect of evasion of duty under this Bill. If they endeavoured to give this comprehensive and specific enumeration of every case it was very possible that after all something would be omitted, and that under these circumstances persons might be assisted in the evasion of payment of duty. Of course, if the hon. and learned Gentleman would guarantee to enumerate every case he should be much obliged to him for doing so, but to enumerate them partially would do no good whatever. The hon. and learned Gentleman's Amendment contained a limitation under which he said property was not to be taxed over which a person had a general power of supervision unless he in fact exercised that power. The result of that would be that if a man wanted to give another a life interest in £10,000 which upon his death should pass to his son, the father, although he might have a general power of control, and his son be completely at his mercy, might not exercise his power, and so the tax which would otherwise fall in at his death would be lost. In any case, whether his argument was right or wrong, he would ask the hon. and learned Member to reconsider the matter, and make any suggestion which he might think fit as to the limitation of the power of disposal when Clause 18 was reached. They would also find opportunity on Clause 18 to discuss the whole question of tenants in tail, in possession, or in remainder. There appeared, he thought, to be some good ground for the proposal in the Amendment with regard to base fees, and to that proposal he undertook to give further consideration. He hoped the Amendment might not be pressed further now, and that the Committee would consent to deal with these matters in due order.

SIR R. WEBSTER (Isle of Wight)

said, it was essential that the Committee should know to what they were coming. He must make a protest on behalf of his hon. and learned Friend that this was an Amendment inspired by some Committee.

MR. R. T. REID

said, he did not mean to convey that. All that he wanted to say was that the Government by their clause had done the best they could to avoid evasion of the Act.

SIR R. WEBSTER

said, he knew of no committee in this matter or of any persons' intention to endeavour to avoid responsibility under the measure. This Amendment had been placed upon the Paper in order to make the thing more clear. The Government, although they had access to the most competent advice, were not able at present to say that they would accept it; and he wanted to know what, by the action of the Government, they were storing up for themselves in view of the fact that when any question of importance arose they were invariably asked to postpone it until some subsequent clause was being deal with? It was absolutely essential that they should know what meaning was to be given to the words— property of which the deceased was competent to dispose. If that could not be settled now the whole matter would have to be re-discussed upon Clause 18. But he would not put it as a matter of mere convenience. These definitions must inevitably be dealt with, and he thought the Government ought to deal with them at once. This Amendment had been upon the Paper for some days. If the hon. and learned Solicitor General did not think the words were quite suitable he could amend them just as easily now as when they came to Clause 18. There was no reason for the suggestion of the hon. and learned Solicitor General that his hon. and learned Friend who had introduced this Amendment was bringing the House to the consideration of esoteric subjects. He submitted that the real matter that they had to consider was what was the degree of competency to dispose which a person should have in order to bring the property within this aggregation or pool contemplated by the clause? It was not right to put in general words like "competent to dispose" without knowing exactly what it was the Government meant. Such words would include the case of any man who had the power of exercising appointment—the case, for instance, of a man who had these carrying powers, and who by virtue of them was brought in as a mortgagee with power to sell, and who would be taxed up to a far larger sum than would be justifiable. He really could not understand why the Government should have put in these words. The words being there, and the Amendment being moved, he submitted that it was essential that the matter should be discussed now. They might have some days, or weeks, or months hence, a discussion as to the meaning of Clause 18, but between this and then he thought they were entitled to information from the Government which would show precisely what were the kinds of property which would fall into the aggregation.

MR. GIBSON BOWLES

said, the Solicitor General had put to the Committee the case of a man who, without having any interest in a property himself, might have a power of appointment which he might hold in terrorem over his son, and he suggested that, although there was no exercise of power, yet upon the death of the father the property would pass. Now, this was a question that was by no means new. It had been argued before with every advantage that legal acumen could give.

MR. R. T. REID,

interrupting, said, that if a man had a power of appointment, and did not exercise it in life, the question did not arise.

MR. GIBSON BOWLES,

continuing, said, that he was remarking that this question as to property which did or did not pass under certain circumstances was not a new one. The Solicitor General had told them that the sub-section had been devised for the purpose of preventing evasion. If that was the ease, he did not think it was required. But it was one of the inconveniences of this Bill that when one was endeavouring to get at the meaning of a particular clause, he had to refer to other clauses, and to other Acts of Parliament. If the Solicitor General had the Act of 1881 as amended by the Act of 1889 before him, he would see that there were ample provisions against the evasion of duty. By their proposals the Government were endeavouring to bring in considerations which did not really exist. It was pretty much like saying that a man who had a general invitation to dinner, and never accepted it, had never dined. He did not think that the course which was being taken by the Government was likely to advance the Bill. When everybody had forgotten about that, and not till then, the Government were to bring in their definition of it. That was not fair to the taxpayer, who was entitled to know at once under what heading he was to be taxed. As the Bill stood, the unfortunate taxpayer had to run all over it from clause to clause to see what it was intended that he should bear in the way of fresh burdens of taxation. He-was disposed to move an Amendment himself, in order to remedy this inconvenience, and should do so except that he was anxious to save the time of the Committee. As to this particular-point of limitation, he entirely agreed with the hon. and learned Member who moved the Amendment that the passing of properties referred to ought to be limited to the case of a man who was absolutely entitled thereto or who had the power to appoint to the property, and had exercised that power. What passed in the case put by the Solicitor General was not property at all, but merely the potentiality of property. It was no answer to say that if the clause was wrong in itself it was wrong advisedly in order to prevent evasion, because, as he had pointed out, the danger of evasion was already amply provided for. He thought that this was an Amendment which the Committee might very fairly and properly adopt.

MR. HALDANE (Haddington)

said, he had listened to the discussion with the view of ascertaining as far as possible what were the points of substance and what the points of drafting, because he was sure that on points of drafting the Chancellor of the Exchequer would endeavour to please Members opposite. Three points had been raised on the Amendment, but he thought that the first two of these—namely, that relating to the base fee and that relating to fiduciary powers—ought to be dealt with in later clauses of the Bill. There was, therefore, only the one point to be disposed of in this clause—whether there should be included in the property passing for the purpose of duty property which at the time of a man's death he was competent to dispose of. Supposing the Government agreed to exclude property over which there was a general power of disposition if that power had not been actively exercised, the door would then be opened not to evasions but to a state of things which was certainly not desirable. Nothing would be simpler than for a man to buy property in the name of his son or in somebody else's name, reserving to himself a bare power of appointment. He felt that if systems of this kind were brought into operation it would be a very great evil. The Committee had therefore to consider whether any advantage was to be gained by adopting the Amendment. Anybody who was in the happy position of having property which he could but did not turn to account was not entitled to very much pity if he did not make use of his opportunities, particularly as under this Bill his property would be subject to an onerous duty if he did not exercise his powers. It seemed to him that the one broad principle involved in the Amendment ought to be disposed of, and there was a clear balance of advantage in dis- posing of it in the way proposed by the Bill.

MR. GRAHAM MURRAY (Buteshire)

was of opinion that the matter ought to be discussed now. It seemed to him that it would be perfectly impossible to discuss the very important question of aggregation without knowing first of all what it was that was to be aggregated. There was another objection to postponing the discussion. Although the Solicitor General had assured the Committee that the matter could be dealt with in the 17th or 18th clause, the Chancellor of the Exchequer would have returned to the House before the last-named clauses were dealt with, and he would contend on a point of Order that the subject had been already settled by the Committee. It seemed to him (Mr. Graham Murray) that the hon. and learned Gentleman opposite (Mr. Haldane) had really not met in any way the point which had been raised with regard to the fiduciary position. Surely it was not worth while to introduce words which had not at present found a single sponsor, and which would undoubtedly apply to all sorts of people which had powers at their disposal, and yet were not meant to be touched by the Bill.

MR. R. T. REID,

interposing, said, that the power of appointment by a trustee in favour of other persons was not a power of appointment of a general character, and it was only general powers of appointment that the sub-section dealt with.

MR. GRAHAM MURRAY

said, he was speaking not of powers of appointment, but of powers of disposal. Any trustee who had got a title to property made out was competent to dispose of that property, but he supposed it was not intended to impose a Death Duty upon the trustee in respect of such property. The Solicitor General said, that what the Government wished to get at was not only the amount a man had in the bank at his death, but the money he was able by a stroke of the pen to put into the bank. Why should not the Inland Revenue Authorities, however, wait until the man had exercised that stroke of the pen? If he did exercise it, the money would become part of his assets, and he (Mr. Graham Murray) did not think there was very much danger that, as a rule people would refrain from appointing to themselves all that they could appoint. The Solicitor General appeared to forget that the Probate Duty was only paid in the case of powers of appointment being exercised. He should have thought it a very simple proposition that a man should not pay as for his own property upon that which he had never had for himself. The question was not altogether whether the words which were suggested by the Mover of the Amendment were the right ones, but rather whether the words— property of which the deceased was at the time of his death competent to dispose were the right words. It had been pointed out that those words obviously carried too much, and it was really too much to ask the Committee to insert them now in order that they might have the opportunity of amending them upon some subsequent clause.

MR. MOULTON (Hackney, S.)

said, he did not believe there was the faintest danger of any judicial tribunal failing to perceive that the words "competent to dispose" were not used in the sense of "competent to realise or change the form of." A trustee was not capable of disposing of the trust estate. If a trustee sold the trust estate he was bound to hold the money in trust, and had no power of disposing of it. No one who considered for a moment what the object of this Bill was could doubt that the phrase— property of which the deceased was at the time of his death competent to dispose meant property of which the deceased was competent to transfer the beneficial interest to some other person. The next question was as to the power of appointment, and the substantial point was whether a person with a general power of appointment should or should not be taken to have the property, whether he had exercised the power of appointment or not. If a man was competent to dispose of property, it did not seem to him to make the slightest difference whether the disposition was made by appointment or by deed. It had been suggested that it made all the difference if the effect of the non-exercise of the power of appointment was that the property went in a particular way. If, however, a man did not exercise his power of appointment to his own property by will, it went in a particular way under the Intestacy Laws. It really made no difference whether the property went under the Intestacy Laws or whether it went under some particular deed. Under these circumstances, he thought that in substance the words of the Bill described that which was the essence of the matter. If a man was competent to dispose of property that was all he was competent to do with regard to any property, and the matter ought to be looked at as if he had disposed of it.

*MR. BUTCHER (York)

said, the hon. and learned Gentleman opposite saw the necessity of some limitation in the clause, and declared what he would do if he were a judge trying a case. But he (Mr. Butcher) did not think that the imposition of a duty of this kind should depend on the particular view a particular Judge might take of the word "dispose." The object of the Amendment was to make the meaning clear to ordinary minds. If by "dispose" was meant "transfer the beneficial interest," his hon. Friend would probably accept an Amendment in that sense. He (Mr. Butcher) urged upon the Government to act upon the colonial analogies. But the Government were not asked to act upon analogies alone. What was required was to impose a tax on property which, in the ordinary, popular, and intelligent sense of the word, was the property of the deceased. If the deceased could, by doing something or other, have made property his own which was not his own, the hon. and learned Member contended that he ought to pay duty on that property. He (Mr. Butcher) said that unless and until the deceased had gone through that process he ought not to pay duty on the property. The hon. Member for King's Lynn gave an illustration. He (Mr. Butcher) would give another. Supposing he was offered a gift of £1,000, and he refused it for reasons not necessary to inquire into, would the hon. and learned Gentleman say that the £1,000 should be deemed part of his property, he having been competent to dispose of it, and that his successor should be charged for it. Of course, if he accepted the £1,000 it would be his own, and his successors would be properly chargeable. But until property really belonged to a man, and was in his possession, it was unreasonable to charge his successors duty in respect of it.

THE SECRETARY OF STATE FOE INDIA (Mr. H. H. FOWLER, Wolverhampton, E.)

said, it was difficult to discover whether they were discussing a drafting Amendment or one of substance. There was a difference of opinion as to the part of the Bill in which the Interpretation Clause should appear, but he thought there could be no doubt that certain generic words should appear in the enacting clauses, and that then the Interpretation Clause should fully and clearly and specifically express what those words meant. The Government had taken the course of introducing in Clause 18 a complete and exhaustive Interpretation Clause, and this Amendment really invited the Committee to discuss that clause. In the present clause they had adopted the words— the property of which the deceased is competent to dispose. When the time arrived to discuss the meaning of the words then would be the time to argue out the various hypothetical cases which had been put before the Committee. He could put a case where the payment of duty would be entirely evaded by real property if the view of the hon. Member opposite were adopted. But this was not the time to discuss that question. They were fully determined to discuss the words "competent to dispose" in Clause 18, but if they were on every clause to be discussing every possible meaning of technical words—words of art—of which there was hereafter a full interpretation, they would never be able to make progress with the Bill, and would get into a most confused state. He, therefore, asked the Committee to come to a conclusion on the matter. The Government thought the words they had adopted were the best, at any rate, any qualification or restriction of them should be reserved until they came to Clause 18.

*MR. MATTHEWS (Birmingham, E.)

said, he thought the framers of a Bill of this description should be allowed considerable latitude as to the order in which they inserted their clauses; but he would point out the extraordinary position in which the Committee would be placed if the meaning of the words "competent to dispose of" was not cleared up now. They were asked in Clause 3 to say that all property passing at death, of which the deceased was competent to dispose, should be aggregated for the purpose of the duty; but surely it was necessary to ask what was meant by "competent to dispose"? When he came to Clause 18 he found that the present meaning of the Government was not to confine the extension given by these words to property over which the deceased had a general power of appointment, but to all property over which the deceased had any such general power as would, if he were sui juris, enable him to dispose of it, whether that had been done or not. A child who would be able to exercise a power of appointment if he lived to 21 might die at the age of two. Was it to be assumed that what he might have done if he had lived 19 years longer in the way of exercising the power of appointment had really been done? It was essential that the Committee should know whether this power to dispose of property passed "at death" or not. Then, again, his hon. Friend had referred to the case of a mortgagee. Clause 18 made the mortgaged estate part of the estate of which the mortgagee was competent to dispose. Persons were to be held competent to dispose of property if they had such general powers as would enable them to sell. A mortgagee with power of sale was able to dispose of the whole of the beneficial interest in a property absolutely. Were they to treat such an interest as that as property which ought to be aggregated under this Clause 3? It was perfectly monstrous. What ought to be aggregated under this clause was the amount of the mortgage. Was it reasonable they should go on discussing the aggregation clause without knowing what was to be included in these words? If they did not discuss the matter till they came to Clause 18 they would be told it was already settled. This was not a reasonable provision, and he appealed to the Government whether they would not introduce the necessary definition into the clause, so that it might be discussed now.

MR. H. H. FOWLER

said, that Clause 18 stated what the Government meant; but, of course, the definition in that clause might be limited or extended when it came to be dealt with by the Committee, which would then have an opportunity of dealing with the Amendment, and either accepting or rejecting it.

*MR. MATTHEWS

added that the difficulty was that they were asked to discuss aggregation without knowing what Clause 18 was going to cover.

*MR. BYRNE

said, as a matter of fact Clause 18 in Sub-section 2 (a) did not give an exhaustive definition such as would preclude the insertion of a definition of persons "competent to dispose of" property in this clause.

MR. GRANT LAWSON (York, N.R., Thirsk)

pleaded on behalf of laymen for the insertion in this clause of a definition which could be "understanded of the people." This was the use of a generic word occurring only in one place where in fact it ought to occur. The word "competent" would probably cause little difficulty; but the word "dispose" seemed to give rise to serious discussion among legal Members of the House. They should not put wrong words into Clause 2 in order to whittle away Clause 18, which provided that a person should be held competent to dispose of property, whether he was tenant-in-tail or not. The two clauses at present were absolutely contradictory, and it would be difficult for even a legal tribunal to explain them. It should be made possible at least to appeal successfully to the law.

MR. DARLING (Deptford)

contended that the clause would offer an incentive to a man to act in an unconscionable manner. There might be property in the hands of his brother's children, and, if he had power to appoint himself, he might say, "If I do not, the State will levy a duty as though it were mine, and it will come out of the property I can leave to my heirs; I will therefore take it away from them, and then when my estate pays the duty there will, at all events, be some corpus out of which to pay it." He could not think it was intended to strike at the amenities of family life in this way, even for the sake of bringing money into the Exchequer. Such a result should be obviated by words which could be put into an Interpretation Clause.

MR. GIBSON BOWLES

said, the case put by the hon. and learned Member for South Hackney was that the phrase property of which the deceased was at the time of his death competent to dispose, meant that he was competent to transfer the beneficial interest in the property to some other person. Cases had been put of a man settling property upon himself or settling it away while reserving power to himself of reclaiming it. The case put by the hon. and learned Member for South Hackney was already provided for by the embodiment, in Sub-clause (c), of the Inland Revenue Act.

MR. GOSCHEN

asked the Solicitor General to say whether he refrained from answering what had been said, because he thought the matter ought to be discussed on Clause 18, or because he thought the matter had been already sufficiently discussed. He complained of the way in which the Committee had been treated. In the first instance general propositions were laid down, and they were forced to vote on general propositions to the first clause, which went much further than was necessary for the Bill itself. They could not discuss them because the Government were postponing them to the Definition Clause. What was the use of discussing the point now if they did not know what the property was to be on which the valuation was to take place? He asked, Was that a fair position in which to place—he would not say the Opposition—the Committee? They did not know what the property was on which graduation would take place or the property on which aggregation would take place.

MR. H. H. FOWLER

said, he should not discuss the fairness or unfairness of the matter. No Division or decision taken now could limit the liberty of the House to discuss the Interpretation Clause. If the hon. Member wished, he could withdraw the Amendment, and there would be no necessity to negative it. The Government in no way wished to restrict or fetter the liberty of the House of Commons in the matter.

*MR. BYRNE

said, he was willing to withdraw the Amendment upon the understanding that the Committee would be at liberty to discuss the matter on the Interpretation Clause.

Amendment, by leave, withdrawn.

MR. BARTLEY

moved to leave out the words "at the time of his death," which seemed to be unnecessary even from the point of view of the Government. Although they were to some extent covered by Sub-section (b) they were so changed that the question should be raised whether the words should stand or not.

Amendment proposed, in page 2, line 6, to leave out the words "at the time of his death."—(Mr. Bartley.)

Question proposed, "That the words proposed to be left out stand part of the Clause."

MR. R. T. REID

said, the hon. Gentleman could not have realised the effect of the language. He apparently objected to taxation not only of property undisposed of at the time of the testator's death, but of property which at any period of his life he would be competent to dispose of. The hon. Gentleman surely must see that his Amendment was unnecessary.

SIR R. WEBSTER

was sure that his hon. and learned Friend had not quite considered the effect of the language from the practical and financial points of view, with regard to the power possessed at death and under the words "or had at any time." To settle the matter now would not cause delay, but would save a double discussion.

MR. BARTLEY

said, the point he desired to bring forward was a practical one which had arisen in his own experience, where a testator left the life interest in the corpus of a sum of money to his son, who, on certain conditions, had the power of leaving the corpus as he thought proper. Under this Bill a second charge for duty would be made. If the Government would introduce some words of limitation in reference to the life estate the difficulty would be removed. The individual would then pay on his life interest.

MR. R. T. REID

said, the point would arise on another sub-section.

Amendment, by leave, withdrawn.

*MR. BYRNE moved, after "dispose," in page 2, line 7, to insert the words, but as to property over which the deceased had only a power of appointment to the extent to which such power shall have been exercised by him and not otherwise. This Amendment had reference to the exercise of the power of appointment by the deceased only.

Amendment proposed, in page 2, line 7, after the word "dispose," to insert the words, but as to property over which the deceased had only a power of appointment to the extent to which such power shall have been exercised by him and not otherwise."—(Mr. Byrne.)

Question proposed, "That those words be there inserted."

MR. R. T. REID

said, this Amendment no doubt raised a point which would have to be discussed before the Committee stage was concluded. Probably it would arise on Clause 18, and he hoped therefore his hon. and learned Friend would withdraw the Amendment.

SIR R. WEBSTER

pointed out that this was a question of principle quite apart from the point on the words "persons competent to dispose of." It was quite clear that under Clause 18 a number of questions would arise which it was important the House should recognise this principle would affect. He hoped that would be noted by the framers of the Bill before they determined whether or not they would proceed with the clause. It would therefore be wise for the Committee to discuss the matter further.

MR. R. T. REID

asked whether it was necessary to discuss it now? He: was perfectly clear it could not interfere in the least with Clause 18.

MR. A. J. BALFOUR

said, the Solicitor General offered to traverse the view taken by the Secretary of State for India, and as his (Mr. Balfour's) view was the same as that of the Secretary of State for India he should like to ask the Chairman's ruling as to whether a division upon the Amendment would out-cut any further discussion upon the point?

*THE CHAIRMAN

It strikes me that the proper place to raise a discussion upon this Amendment is upon Clause 18, which deals with definitions, but I could not decide this Amendment to be out of Order in the place where it is moved, or so much so that I should order it to be transferred.

MR. A. J. BALFOUR

said, they did not consider they had been fairly treated by the course the Government had taken. The actual intentions of the Government they did not question, but the substance of the procedure of the Government they were unable to approve of, and as the Chairman had ruled they could take a Division without shutting out further discussion he thought they ought, without further delay, to mark their sense of the error into which the Government had fallen by going into the Lobby and expressing in that authorised fashion their protest.

Question put.

The Committee divided: —Ayes 147; Noes 192.—(Division List, No. 75.)

*THE CHAIRMAN

The following Amendment, standing in the name of Sir A. Acland-Hood, is out of Order:— In page 2, line 8, leave out sub-section (b), and insert,—(b) Property passing on the death of the deceased under any settlement or other disposition made by the deceased either alone or jointly with any person or persons dated after the commencement of this part of this Act, or under the will or on the intestacy of the deceased.

MR. GRANT LAWSON moved to leave out sub-section (b).

MR. GIBSON BOWLES

said, before his hon. and learned Friend moved his Amendment he (Mr. Gibson Bowles) had one he wished to move—namely, to insert, after the word "dispose," the words which he had taken from Clause 18— Of property if he has such an estate or interest therein, or such general power as would, if he were sui juris, enable him to dispose of the property including a tenant-in-tail, whether in possession or not.

*THE CHAIRMAN

The Amendment is out of Order because of the words which have been previously negatived.

MR. GIBSON BOWLES

said, the same thing occurred with regard to other words that were negatived, and the Amendment was not ruled out. [Cries of "Order!"] He was in Order in pointing out that the Amendment was correct.

*THE CHAIRMAN

It would not be in Order where the hon. Gentleman proposes it.

MR. GIBSON BOWLES

I bow to your ruling, and will not move it; I only wished to get a declaration from the Government.

MR. GRANT LAWSON

said, he begged to move the omission of Sub-section (b). The Notice Paper bristled with Amendments to this clause, put down by the learned Solicitor General and others. Where a benefit accrued or arose to any person, those words "towards any other person," complicated the matter very considerably. The most natural case was that of a man having an interest in property of which he would obtain possession on the death of someone else. The most general cases were those of leases for lives and the purchase of reversions. He would take, first, the purchase of reversions, and he would cite a case which was an actual case in the West of England. A man who was a large owner in the West of England had sold the reversion expectant on his death to a purchaser for value. At the present moment, under the law A, having sold his property to B, there would be no Succession Duty to pay, as was clearly laid down by a decision of Sir George Jessel, when Master of the Rolls; but if this sub-section stood, it was quite clear that B would have to pay Succession Duty on the death of A. Let the Committee note the injury that was done by such a change in the law. In the case of an old sale of a reversion, expectant on the death of the man selling, what was originally a good bargain might become a very bad one if a large sum had to be paid under the Succession Duty. Then with regard to a future sale of reversions how would this act? If they put an Estate Duty on they would be reducing the value of the property and rendering a sale of the reversion almost impossible. Another consequence would be that all the property would be aggregated, which would increase the amount to be paid on the reversion. In regard to leases for lives they existed largely in Lancashire and, he believed, in other parts of the country, and under this sub-section where any one of these lives dropped out the Succession Duty would have to be paid upon the last life that dropped out. Again, the Estate Duty would have to be paid on the death of a man who probably was a stranger, and had nothing to do with the property except that he was put, as a nominal man, into the lease for lives. The subsection was far too wide and would work manifest injustice. He thought they ought to throw out the whole of these words for the purpose of enabling the Government to substitute some words that would not work such gross injustice as he had pointed out.

Amendment proposed, in page 2, line 8, to leave out Sub-section (b).—(Mr. Grant Lawson.)

Question proposed, "That Sub-section (b) stand part of the Clause."

*MR. TOMLINSON (Preston)

said, he would like to cite a case within his own knowledge, to test the operation of this clause. The property he referred to was bought a good many years ago, and was bought subject to an annuity to a lady who practically lived upon that annuity for 40 years. The purchaser on her death paid Succession Duty, but, had this clause been in operation, on succeeding to the property he could only have dealt with it by paying a sum arrived at by aggregating the whole of the property of the original vendor, including the annuity, and in that event it was doubtful whether such a duty could have been paid. It was manifestly unfair that those persons who succeeded to property of this kind should be saddled with the payment of a tax of which they had no notice or expectation.

MR. R. T. REID

said, the Amendment of the hon. Gentleman was to omit the sub-section altogether, and not to amend it. To this sub-section there were various Amendments on the Paper, one of them standing in his own name. Another effect of carrying the Amendment of the hon. Member would be to shut out all those and prevent any discussion. Therefore, it would be very inconvenient to omit the sub-section altogether, and at this time it would not be proper to discuss the Amendments that were on the Paper.

SIR R. WEBSTER

quite agreed that they ought not to discuss the specific Amendments that were placed upon the Paper, but he would point out that it was in accordance with the Rules of the House to move an Amendment to omit a sub-section in order that they might get a statement by a Minister in charge of the Bill as to what the purview of the Bill really was, otherwise it was difficult to ascertain the proper value of the subsequent Amendments. What he wished to ask the Chancellor of the Exchequer or the Solicitor General was, what was the real class of property that was sought to be brought in? He would not discuss the latter part of the sub-section, which was the subject of the Amendment of the learned Solicitor General, for the reason the learned Solicitor General had referred to—namely, that it would have to be discussed later upon its merits. If the Chancellor of the Exchequer would tell them what class of property was brought in it would have the effect of shortening the subsequent discussion. It happened that in the Isle of Wight leases for lives still existed to a considerable extent—for one, two, or three lives. What he wanted to know was this: Suppose a person simply occupied land for a term of years dependent upon, probably, three lives, was it intended that that property in which the interest ceased on the death of the deceased should come under the tax? [Sir W. HABCOUBT: When benefit accrues or arises.] Did the Chancellor of the Exchequer mean that wherever there was an existing interest dependent upon a life, or partially dependent upon a life, that that should be a case in which benefit accrued or arose to any person so as to give rise to this Estate Duty? If so, subject-matter had been included which had never been subject to Succession, Probate, or Legacy Duty. Was it intended by this sub-section that all interest which arose or accrued to third persons by reason of the death of a person should be subject to valuation for the purpose of the Estate Duty? When they knew what was the intention of the Government on this important matter they should be able to consider whether they could pass at once to the Amendments in the sub-section, as distinguished from rejecting the subsection itself.

SIR W. HARCOURT

remarked that it was extremely difficult in framing a clause such as the present to do more than lay down the general principle that would be pursued; in fact, it was impossible even to point out generally how particular cases would be treated. The scheme of the Government was, generally, that wherever property passed on the death of the deceased in which other persons then directly acquired an interest, those persons who received the benefit should pay a proportionate tax. There were, no doubt, exceptions to this rule in the case of certain classes of property, and these exceptions at a more convenient occasion would deserve special examination and consideration. Meanwhile that might be laid down as the fundamental principle of the proposition.

MR. COURTNEY (Cornwall, Bodmin)

said, he was extremely puzzled about this sub-section, and the right hon. Gentleman's speech had not in any way elucidated matters. What he understood was aimed at in this proposal was the dealing with successive interests under a settlement. If a person was tenant for life under a settlement, on his death the property which passed to the next person in succession under the settlement was to be taken into account as part of his property. Whether that was right or wrong he would not now inquire, but that was what was aimed at, and it was inherent to the rest of the Bill. But the words here meant something quite different. They were concerned with property passing on the death of a deceased, and the property which was to be included in the aggregate, and which was to be taxed on such a death. Take this case, which was common in his own part of the country: a person was the owner of a lease upon his own life. He died, and that property passed upon his death, and went back to the reversioner. The whole property, as far as the person who died was concerned, vanished. It might be all that he had got, and how could they take that, therefore, which absolutely vanished and passed to a person who was a complete stranger, as subject to taxation for Death Duties?

SIR W. HARCOURT

We do not look to whom the property passes.

MR. COURTNEY

said, they looked to two things—namely, to whom the property passed, and what class of property it was which passed. Here the thing vanished; there was no property left which could be said to have survived the death of the deceased, because so far as he was concerned he had no power over it; it went into nothing upon his decease, and to tax that appeared to him to be entirely wrong. He could understand taxing successive interests under a settlement, and limiting the taxation to settled property, but this did not limit it at all.

MR. WYNDHAM (Dover)

said, the Chancellor of the Exchequer had just stated that in this clause the Government had given a general outline of the property which was to be subject to this Estate Duty. In the next clause, they were told, all property so passing was to be aggregated—

SIR W. HARCOURT

said, that was exactly what he did not say. There were two classes of property. There might be property that passed which was subject to duty, but not subject to aggregation, and there might be property passing in which the deceased had no interest, but which, because it passed on death was subject to duty, but was not subject to aggregation. The distinction between the two cases was clearly pointed out in Clause 3.

MR. WYNDHAM

thought the words in the sub-section were too wide. Take the case of a man who sold the fee-simple of an estate and preserved a life interest. When he died his interest ceased, and it was equally certain that the benefit accrued to somebody else. The property would pass at his death to the person who had bought the fee-simple. If these words were wide enough to cover that case, as he contended they were, it seemed to him the Estate Duty would fall upon the estate going to the purchaser, and would also fall upon the money which the vendor had received, perhaps, 15 years back, and which might be tied up for his children. If that were so, the same property, in its relation to the family, was taxed twice over, and if it came under the aggregation it might be that a higher rate of graduation would be imposed upon the whole of the property descending to the children.

MR. R. T. REID

said, this clause was a very difficult clause to draft owing to the delicate character of the property which it had to deal with. Clause 2, Sub-section (a), dealt with property which might be, say, £1,000 which a man had in the bank. Sub-section (b) was intended to deal with settled property—that was to say, with property settled or encumbered, as opposed to property which was free. He would endeavour to explain what was the purpose of the clause and the intention of its framers. It dealt with property under settlement, with property encumbered by annuities or rent-charges, and with property held or leased pur autre vie. The mode in which it was proposed to deal with such property might be best shown by illustration. Take the case, first, of settlement. Suppose an estate was settled upon A for life and afterwards to B, C, and D for life, and, finally, the fee-simple were given to E; as the Chancellor of the Exchequer explained, only one duty would have to be paid in respect of that settlement. The thing had been to find out the period in the settlement at which the payment should be made. It was now intended that it should be made at the time when the first life interest should drop, and then should be free for ever afterwards during the continuation of the settlement. Take next the case of annuities dealt with under this clause. They were, of course, intended to be annuities settled upon property. Suppose the annuity was for a term of 80 years. If the man in the enjoyment of that annuity died at the end of 20 years, then the duty would be payable on the value of the 60 years which were unexhausted. Then, again, supposing there were au annuity charged upon real property for the life of a person, if that person died the burden or encumbrance upon the property would be released. In such a case the duty under Sub-section (b) would be payable upon the difference between what the remainderman or owner of the property had before and what he would then have; in other words, upon the benefit accruing to him through the death of the annuitant. Thus, if £1,000 a year were the whole value of the property and £500 the amount of the annuity, the taxable benefit would be the difference—namely, £500 a year. The benefit would have to be valued under the Valuation Clause, which was Clause 6 of the Bill. Sub-section (b) would, by a later Amendment which he would himself propose, be altered for the sake of clearness. The property would only be taxed in so far as benefit accrued or arose to the person paying the tax in respect of it. What that benefit was estimated at would be a matter of valuation, and he thought probably the Committee would think that was the right way of dealing with it. They dealt with that subsequently in an Amendment standing in his name at page 29 of the Amendment Paper, and which was as follows:— The value of the benefit accruing or arising from the cessor of the interest of a deceased person in any property shall—

1. (a) if the interest extended to the whole income of the property, be the principal value of that property; and
2. (b) if the interest extended to less than the whole income of the property, be the principal value of an addition to the property equal to the income to which the interest extended."

If an annuity was £1,000 a year that would be the whole value of the property. If it was £500 a year and the property was property of £1,000 a year the benefit would be that £500. That was the meaning and purpose of the clause, and the matter had been made clearer by the further Amendment to which ho had just referred. In reference to the remarks of the right hon. Member for Bodmin, where a lease for life had been granted for full consideration, that would not come under the operation of the sub-section at all. There was an Amendment in the name of the Member for South Hackney making that clear, but, indeed, it was clear in the general law, and it would also be made clear by another sub-section in the Bill later on. To those hon. and right hon. Gentlemen who were disposed to criticise the language in which the Government had endeavoured to carry out their intentions, all he could say was that he wished they had themselves had the task to perform.

MR. A. J. BALFOUR

sympathised with the hon. and learned Gentleman in the extreme difficulty he must have experienced in dealing with such a complicated matter. It was indeed difficult for him to deal with the subject, and for this reason: According to the Chancellor of the Exchequer the Bill, in Clause 1, first proceeded to lay down general principles. It then proceeded, in Clause 2, to give a definition of Clause 1. And perhaps when they came to Clause 18, which he understood to define Clause 2, they might find that they must look to some still later clause in order to find a definition of Clause 18. The result of drawing a Bill on these principles was that even the Solicitor General's powers of lucid exposition were barely sufficient to make clear the intentions of the Government. Even now he was not sure that he understood how the Government intended to deal with the cases which had been put from that side of the House. He was not quite sure who paid the duty or how the duty was to be estimated in the case of a man who had given value for a reversion which he obtained upon the death of the present owner of the estate.

MR. R. T. REID

said, the question of reversions would come up at another stage, and could be then dealt with.

MR. A. J. BALFOUR

said, he thought the hon. and learned Gentleman was perfectly justified in refusing to discuss at that stage the question whether the Amendment of the Government or the Bill of the Government curried out their intention in that respect. But perhaps the hon. and learned Member would answer in a word whether a person who came into a reversion for which he had paid a substantial consideration in time past would have to pay duty as if he succeeded without any such payment.

MR. R. T. REID

He would not.

MR. A. J. BALFOUR

thanked the hon. and learned Member for his perfectly plain answer. He would also greatly oblige if he gave an answer, similarly plain and brief, to the case raised by the hon. Member for Dover.

MR. R. T. REID

said, that when the question of aggregation properly came up he would endeavour to deal with it, but he could not argue it now.

MR. TOMLINSON (Preston)

said, that this was not a question of aggregation at all. The case supposed was when on the death of any person a benefit accrued to someone else than the deceased. As, for instance, where property was sold subject to an annuity arising out of the property. On the death of the annuitant a benefit accrued not to the estate of the deceased person but to the purchaser of the estate. It was conceded that, in that case, as the law now stood, Succession Duty would be payable on the value of the succession by the purchaser of the estate. But in this clause they were considering the position not of the owner of the reversion which had fallen in, but that of the deceased person whose estate was not increased by the occupier. The question they asked whether it was intended that the representative of the deceased should be required to make any payment on account of the filling in of the life estate. If he did they were making him pay on what did not increase the value of the estate. If he did not, why should this case be brought within this clause? They were at least entitled to ask that there should be some words inserted in this clause indicating that the estate of the deceased person was not to be made liable for this duty.

MR. CARSON (Dublin University)

said, he quite understood that, according to the framing of the Bill, all property, whether settled or unsettled, was to be taxed upon the death of the deceased; but he should like to ask why property which had never been in any sense the property of the deceased at all should form portion of an estate on which taxes were to be levied? An interest might arise to some persons by the death of A B, though A B himself might never have benefited by that interest. Supposing a man had a lease for his own life. He died; but his estate was in no way benefited by his death, nor did any estate arise at his death. Of course, it was possible that the lessor's interest went back to the landlord. But was the benefit to be taxed a portion of the property of the deceased, or was it part of the property of the landlord, to whom the lease reverted? That point ought to be cleared up.

MR. R. T. REID

said that, an examination of the clause would show that the executor paid taxes only on the estate he received from the deceased.

MR. CARSON

said, that according to his reading, there did not seem to be any provision for taking out of the taxable estate interests which passed to a third party.

MR. MOULTON

said, that in Clause (a) they took the ordinary form of property that a man had to dispose of; in (c) they took the suspicious cases, where property got transferred contemporaneously with the death of a man. They could not say that all those cases would be cases which were in their essence similar to a devolution that ought to be taxed. But the object was to secure that no case which resembled an ordinary testamentary disposition should escape taxation. He quite agreed that there would be a large class of cases that would come within the general words of the clause that ought not to come within it; but they could be cut out by amendment.

MR. A. J. BALFOUE

said, that the question to be determined was at what point in the Bill all the exceptions were to be enumerated. He hoped that before Subsection (b) was disposed of every exception which the Government intended to make would be clearly stated.

MR. BARTLEY

said, that the clause was so wide that it would inflict great hardship on many persons. In the case of a Tease granted for a life who was to pay the duty when the lease fell in? Clearly the successor of the deceased lessee could not pay, and it would be hard to ask the reversioner to pay for getting back his own property.

MR. R. T. REID

said, that in the opinion of those authorities who had framed the Bill there were decisions which would exempt from payment property for which value had been given. But to prevent any obscurity there would be provisions in a later part of the Bill with regard to the point. He hoped the Committee would now discuss the particular sub-section.

MR. A. J. BALFOUR

said, he thought it was desirable now to try to amend the sub-section, so as to withdraw the operation of the very wide words with which it began.

*MR. TOMLINSON

said, that the hon. Member for Thirsk, who had to leave, had asked him to say that if it was thought that the withdrawal of the Amendment would facilitate the discussion of the clause, he was willing to withdraw it, and that he had asked him to request, on his behalf, that it should be withdrawn.

Amendment, by leave, withdrawn.

*MR. BUTCHER (York) moved to leave out the words "or any other person," in line 8 of Clause 2. If the words were left in there would be established a duty of a totally unknown kind in the case of a lease granted for lives. If a landowner granted a lease to a tenant for three lives at somewhat less than a-rack-rent, then on the dropping of that lease of lives Estate Duty would be immediately payable on the improved rental of the property. That was a duty of an entirely novel character. But if the lease were granted for 50 years, instead of for lives, then on the termination of the term no duty whatever would be payable. That was an anomaly that hardly have been intended by the framers of the Bill. The omission of the words would make the clause deal with "property in which the deceased had an interest." That would sufficiently cover every case in which duty was legitimately-payable.

Amendment proposed, in page 2, line 8, to leave out the words, "or any other person."—(Mr. Butcher.)

Question proposed, "That the words proposed to be left out stand part of the Clause."

*Mr. T. H. BOLTON (St. Pancras, N.)

said, that if the sub-section was amended as proposed, property in which the deceased had an interest, at his death, would be taxed; and that would be reasonable; but it would be most unjust to apply the sub-section to-property in which, in the same event, "any other person" had an interest. The Chancellor of the Exchequer had said that the object of the clause was to gather in for the purposes of duty all estates passing on the death of a tenant for life, so as to place a charges on the general estate. That might be reasonable in reference to estates that, were family estates; but to bring in estates that were not associated in any way with the family was carrying the proposition much farther than it was at all desirable.

MR. R. T. REID

said, that two hours ago he had fully explained the views of the Government with regard to the clause. The omission of the words would undoubtedly prevent them from dealing with estates of other persons with which they ought to be able to deal. Supposing A settled a property on B during the life of C, and, after C was dead, upon some other persons. In such a case, unless the words "or other persons" were included in the clause, the property of C would pass to A and B without paying duty. The omission of the words would facilitate the evasion of the duty. Some people thought it was the most meritorious thing in the world to try to evade the duty, and it was the purpose of the Chancellor of the Exchequer to endeavour to prevent that.

*SIR R. WEBSTER

said, he was sorry he had to press for an explanation of a little more satisfactory character. What they were endeavouring to find out from the Government was the class of property that was intended to be brought within the purview of the Bill by the words "or other persons." Everybody had hitherto admitted that ordinary transactions between landlords and tenants as to leases for years or leases for lives, should not pay Succession Duty, or Death Duties of any kind at the end of the term. At the end of a lease for lives, the tenancy dropped and reverted to the landlord. The Solicitor General might intend to include that property, but if he did it was an entirely new departure.

MR. R. T. REID

said, that such a case would not be included within the terms of the sub-section, and that intention would be made still clearer by the Amendment of the hon. and learned Member for South Hackney at the end of Clause 2.

MR. BUTCHER

said, that in his opinion the Amendment of the hon. Member for South Hackney would not cover the point he had raised by his Amendment; but as he had the assurance of the Solicitor General that the case he had put with regard to a lease for lives was not contemplated to be within the operation of the clause, he asked leave to withdraw his Amendment.

Amendment, by leave, withdrawn.

MR. R. T. REID

proposed to amend" the clause by leaving out from "deceased" to end of Sub-section (b), and inserting to the extent to which a benefit accrues or arises by the cessor of such interest. According to the wording of the clause as it stood in the Bill, it might be said that if the deceased had an interest of £20 a year in a property of £1,000 a year the whole of the property of £1,000 a year would be deemed to have passed. He did not think that was a proper construction of the clause; but in order to make the matter perfectly clear his Amendment would alter the sub-section so that it should read— Property in which deceased or any other person had an interest ceasing on the death of the deceased, to the extent to which a benefit accrues or arises by the cessor of such interest. It might be said that the question of the valuation of the benefit still arose; but in order to make that clear the Government had put down an Amendment to Clause 6, which was the Valuation Clause.

Amendment proposed, in Clause 2, line 9, to leave out from the word "deceased" to the end of Sub-section (b), and insert to the extent to which a benefit accrues or arises by the cessor of such interest."—{Mr. It. T. Held.)

Question proposed, "That the words proposed to be left out stand part of the Clause."

SIR R. WEBSTER

said, he accepted the Amendment, but he hoped that the hon. and learned Gentleman would bear in mind at later stages of the Bill the many important considerations which must arise, having regard to the fact that it was proposed to tax not only the benefit passing, but the benefit accruing.

*SIR M. HICKS-BEACH

said, he should like to point to one provision which would inflict a very great injustice; it would arise under the words as proposed to be amended by the Solicitor General. Let them take a case. A, the husband, possessed at the time of his marriage £5,000, and B, his wife, £10,000, and under the settlement the money was settled so that each enjoyed the whole for life, and it then passed to the children of the marriage. In the event of the husband predeceasing the wife, she would have to pay Estate Duty not only on the £5,000, which before the marriage belonged to A, but also on the £10,000 which before the marriage belonged to herself. Surely, if that was not intended, some words should be introduced to make it clear.

MR. R. T. REID

said, he did not think the wife would be called upon to pay the duty on her own money. He would, however, look into the language of the clause to see if it could be made more clear, but he believed the contingency was provided against in Clause 6.

*MR. TOMLINSON

said, there was entire ambiguity in the clause as it now stood as to who was to pay the duty. The clause seemed to leave that question severely alone. He supposed the person to pay would be the person who acquired the estate of the deceased, but how about a case in which nothing accrued to the estate, and something accrued to some third person? Surely the representative of the deceased would not be called upon to pay duty when ho received no benefit?

MR. BRODRICK

said that, although the Solicitor General had very clearly explained the effect of the Amendment, he did not think the instances cited by the hon. and learned Gentleman were quite satisfactory. He had taken an annuity of 80 years, of which 20 years had already expired, and he said that the person who received it would pay on the value of the 60 years unexhausted. That seemed fair enough. But then he took the case of a man who succeeded to £500 a year from a property value £1,000 a year. It was proposed to charge in that case on the principal value of £500 a year, but surely it had occurred to the hon. and learned Gentleman that there was a certain inequality in charging the man who succeeded to £500 a year for the remainder of his life on the principal value of £500 a year, whereas the person succeeding to an annuity limited to a certain number of years was to pay only on the value of the unexhausted annuity. He would propose to the Solicitor General that he should insert after the word "arises" in his Amendment the words "to the beneficiary," so as to secure that the payment should be only in proportion to the benefit received. The hon. and learned Gentleman had failed to deal with the case brought forward by the Member for Dover—a case in which it was assumed that a reversion was sold for £20,000. The deceased man had £20,000, and he had a life interest; he left the £20,000 to his children, and the estate went away from them. Under the clause as drawn the Government would get duty not only on the £20,000, but also on the total value of the estate, which would have to be paid by the purchaser of the reversion. Surely the Government could not have a right to both payments? It was to prevent such injustices as those he had quoted that he would move his Amendment.

THE CHAIRMAN

We must first deal with the Amendment before the Committee.

*MR. MATTHEWS

said, he would point to another simple case. A man had a deserving governess who had faithfully discharged her duties for many years. He wished to make provision for her in her old age, so he placed in the hands of trustees a sufficient sum to pay her £200 a year, the principal sum to revert to himself on her death. The governess died, and thereupon a benefit to the extent of the annuity accrued to the estate of the man. Yet the person whose property was supposed to be swollen was the governess, and it was upon her estate that the duty would be levied. The Government had not yet faced the case.

MR. R. T. REID

said, he was afraid that as a result of his fluctuating audiences he had not been understood. He had dealt with that case in the absence of the right hon. Gentleman, and thought he had given a perfectly satisfactory answer. He had stated that Clauses 9 and 12—the details of which the Committee could hardly be expected to discuss at that juncture—amply provided for such a case, and he assured the right hon. Gentleman that the estate of the governess would not be affected in the way he suggested.

MR. MATTHEWS

said, that in a subsequent clause it was laid down that an executor must pay Estate Duty in the case of personal estate and, therefore, he would, in the case of the governess, have to pay that duty in the first instance.

MR. R. T. REID

replied, that Subsection 2 of Clause 5 provided that an executor should pay the Estate Duty in respect of personal property of which the deceased was competent to dispose at the time of his or her death, and may pay in like manner the Estate Duty on any other property passing on such death. But he did not appeal to the Committee that this was not a matter to be discussed now. If there was anything wrong it could be put right on the 5th clause.

MR. MATTHEWS

dissented from the view of the Solicitor General, and placing himself in the case of the man who provided the annuity, said he ought not to be made liable for Estate Duty before he died.

MR. HALDANE

said, that under Clause 5 the executor would only pay Estate Duty on personal property of which the deceased at the time of death was competent to dispose, and he would remind the right hon. Gentleman the Member for South Birmingham that the governess was not competent to dispose of the principal sum. Then Clause 9 provided that a rateable part of the Estate Duty on an estate in proportion to the value of any property which does not pass to the executor as such shall be a first charge on the property liable to the duty. And it was further worked out by Clause 12, which provided for the recovery of the Estate Duty by the person who has paid the Estate Duty on any property from the person entitled to any sum charged on such property, whether as capital or as an annuity or otherwise under a disposition not containing any express provision to the contrary.

MR. HALDANE (Haddington)

said, it appeared to him to be perfectly plain that the duty was not thrown upon the individual, but upon the property which represented the value of the annuity.

*MR. T. H. BOLTON (St. Pancras, N.)

said, under Clause 12 of the Succession Duty Act of 1853, where the successor was also the predecessor, there was no duty payable.

MR. BARTLEY

said, there was nothing in the Bill to show how the extent to which benefit should accrue was to be estimated. He directed the attention of the Committee to the difficulty of providing the machinery for carrying out the proposals of the clause. They had not only the executors to deal with, but other persons who were benefited by the dropping of large interests, and machinery would have to be provided for meeting their case. He thought that the question which had been raised by the hon. Member for Preston was a very fair one. He was glad to hear that the Solicitor General had promised to give his consideration to the matter.

COLONEL KENYON-SLANEY (Shropshire, Newport)

said, that the Committee had been debating this question for the last four hours, with the result that there was a conflict of opinion between the distinguished lawyers in that House as to the meaning of the clause and as to the effect of the Amendment. The result was, that they were absolutely unable to understand what would be the effect of this legislation.

MR. BODKIN (Roscommon, N.)

asked the Chairman if the hon. Member was in Order in discussing the policy of the Bill?

*THE CHAIRMAN

intimated that the hon. Member was in Order, so far as he had gone.

COLONEL KENYON-SLANEY,

continuing, said, he was not attempting to discuss the policy of the Bill. What he was pointing out was that a very strong case had been made out in the course of the discussion which had taken place, that it was not possible that this Bill should be worked smoothly. If he, as a layman, should be called upon tomorrow to administer an estate under this Bill, and endeavoured to gather what was his duty, first from the Solicitor General, and then from advocates on the other side of the House in whom he had faith, he would be, hopelessly confused; and he ventured to say that he would not be more confused than any other Member on either side of the House.

*MR. DARLING (Deptford)

said, he would like to put it whether it was not possible, under the words of the Amendment, and under the law as it stood, that the duty might be paid twice over? Was it not possible that, under this Bill, the benefit which was to accrue might be assessed and duty paid upon it as an interest in expectation, and that, upon the death of the person in respect of whom the interest arose, duty might again be demanded? The hon. and learned Solicitor General appeared to regard this as a jest.

MR. R. T. REID

No, I was merely smiling at the variety of the questions which are put to me.

Question put, and negatived.

MR. BRODRICK (Surrey, Guildford) moved to amend the proposed Amendment by inserting after the word "arises" the words "to the beneficiary."

*THE CHAIRMAN

requested the hon. Member to bring up his Amendment in writing.

MR. BRODRICK

proceeded to the Table and there wrote out his Amendment. While the hon. Gentleman was so engaged—

MR. BIRKMYRE (, &c.) Ayr

said, he must rise to Order. He wished to know if it was competent for an hon. Member to delay the proceedings of the Committee while he wrote his Amendment at the Table?

*THE CHAIRMAN

I think it is an inconvenient practice.

Amendment proposed to the proposed Amendment, to insert after the words, "accrues or arises," the words "to the beneficiary."—(Mr. Brodrick.)

Question proposed, "That those words be there inserted in the proposed Amendment."

MR. R. T. REID

said, the object of the hon. Gentleman seemed to be that a particular method of valuation should be applied to this particular case. If that were so, he must say that he did not think the Amendment would carry out the hon. Gentleman's object.

MR. HEYWOOD JOHNSTONE (Sussex, Horsham)

said, it seemed to him that the clause would be absolutely incoherent unless some such words as "to the beneficiaries" were inserted after "arises."

SIR R. WEBSTER

thought that in all probability the Solicitor General was right in saying it would be better to raise discussions on a later clause.

Amendment, by leave, withdrawn.

MR. WYNDHAM (Dover)

said, he owed an apology to the Solicitor General after the courteous way in which the hon. hon. and learned Gentleman had met the Opposition for troubling him with one of those issues which he would have preferred to have discussed upon Clause 6. The difficulty, however, was that in the 2nd clause there was given a vague outline of what property was to be subject to the novel experiments of the Government. One would have expected that the vile body on which these experiments were to be played would be presented to the Committee in an intelligible whole before the experiments were discussed. The Government had preferred, however, to define the value of property in Clause 6, and the nature of it in Clause 18. It was not too much to ask that Members should have a clear idea of what the general outlines were to be before they proceeded to deal with the Aggregation Clause. He wished to move to add the following words at the end:— Provided that such benefits shall not have been the subject of purchase or value given. He would take the case of a man with £60,000 worth of personalty and a small landed estate. He assumed that he sold the fee simple for £20,000, reserving a life interest. When the vendor of the fee simple died the person to whom he had sold it would receive the fee-simple unencumbered even with the life interest. If the fee-simple had been bought for £20,000 with the life interest reserved, it was clear that the fee-simple without that reservation would be worth something more. The whole estate as received by the purchaser might be worth £30,000. If he (Mr. Wyndham) interpreted Clause 6, Sub-section 3, aright, the purchaser would, under these circumstances, receive a rebate of £20,000. He wished, in the first place, to ask the Solicitor General whether this would be so.

MR. R. T. REID

It has often been said that it is easier to ask than to answer a question; but if I understand the hon. Member's question aright, the substance of it is this—supposing that a man goes into the market or to the owner of property and buys an estate subject to the life interest of the present owner, would any Estate Duty be payable on the amount of money which had already paid full value? I think that no duty would be payable on the amount of the purchase money.

MR. WYNDHAM

said, he was satisfied with the hon. and learned Gentleman's answer as far as the purchaser was concerned, but he had one other question to ask. When the man who had sold the fee-simple died possessed of the £60,000 personalty and the £20,000 which he had received for the fee-simple, would the fee-simple of the estate which would go to the purchaser be added to the pool of the aggregation in assessing all persons who derived benefit from it?

MR. R. T. REID

Will the hon. Gentleman allow me to say that one has to concentrate one's mind on the questions that arise as the Bill goes on, and if I am to be asked questions relating to aggregation upon this clause I must say that, with every desire to inform the Committee as far as I can, I do not think I ought to be called upon to answer them. I confess that I do not clearly follow the hon. Gentleman's point.

MR. WYNDHAM

said, the hon. and learned Gentleman would admit that the graduation of the taxation on the younger children in such a case as he had put would be assessed on the value of the whole of the property which passed at the father's death. Would the tax be assessed on the personalty or on the whole estate, including the landed property which went away to the man who had purchased the fee simple? If the Government said that the estate consisted only of the personalty, the fee-simple having passed away because value had been given for it during the lifetime of the original owner, he should be satisfied, but otherwise he felt that the younger children would be robbed.

MR. HALDANE

said, that these were very difficult questions to get hold of. As he understood the hon. Member's question, however, there would be no aggregation of the value of the estate dealt with in the manner suggested by the hon. Member. He did not think that there was any danger to be apprehended on the point.

*MR. MATTHEWS

said, that one-half of his hon. Friend's question had been answered, but the difficulty respecting the estate of the man who had bought the life interest had still to be dealt with. When the life interest came to an end the money that had been paid would form part of the personal estate. Would the estate be liable to Estate Duty upon the life interest of the deceased?

SIR R. WEBSTER

said, the explanation, so far as it went, was satisfactory, but he must enter one caveat. The hon. and learned Gentleman the Member for East Lothian had said that every case was covered by the Amendment of the hon. Member for Hackney.

MR. HALDANE

said, he had not meant to convey that. No exception of the kind referred to was necessary under the present law; but if it was desirable to have things made plain the wording of the section might be extended.

SIR R. WEBSTER

said, the hon. and learned Member no doubt spoke with authority on these questions. The only exception the Amendment referred to was the case of a transfer wholly for the deceased's own use and benefit. The Opposition were not satisfied with the Amendment, but must reserve to themselves the right of proposing further Amendments at the proper time.

MR. WYNDHAM

said, he was satisfied with the expression of opinion he had elicited from the other House, and would not press his proposal.

MR. BARTLEY

said, that the Bill as originally brought in would not have met the ease of hardship which had been pointed out.

*SIR M. HICKS-BEACH

said, he had handed in an Amendment to the Amendment to add at the end, but exclusive of property which reverts to any person under disposition made by himself. He had asked the Solicitor General a question as to the effect of the Bill on marriage settlements — where property through the death of one of the parties to the marriage settlement came to the other party. He had understood the hon. and learned Gentleman to say that in such a case no Estate Duty would be payable. The hon. and learned Gentleman in proof of that had referred to his Amendment to Clause 6. But that Amendment had no reference to the case he (Sir M. Hicks-Beach) was now putting. He did not wish to press his Amendment if the hon. and learned Gentleman would give him an assurance that the point would be dealt with in some other way. It should not be left in doubt.

MR. R. T. REID

said, the point the right hon. Gentleman referred to would certainly be met in Sub-section 3 of Clause 6.

SIR M. HICKS-BEACH

said, on that understanding he would not move his Amendment.

Amendment (The Solicitor General) agreed to.

*MR. BYRNE moved, in page 2, line 10, after "person," insert other than and except property belonging to a charity or to an Ecclesiastical Corporation in which the deceased had a beneficial interest ceasing on his death. He imagined that, in such cases as the Master of Trinity College, or the Temple, or a Rector of a parish, it was not seriously proposed that Estate Duty was to be payable.

Amendment proposed, in page 2, line 10, after the word "person," to insert the words— other than and except property belonging to a charity or to an Ecclesiastical Corporation in which the deceased had a beneficial interest ceasing on his death."—(Mr. Byrne.)

Question proposed, "That those words be there inserted."

MR. R. T. REID

said, it would indeed be a strange thing if, on the death of a Rector, his family had to pay, and by the Bill as it stood he did not think that would be the case. Perhaps these words would meet the views of the hon. Member. At the end of his own (Mr. Reid's)

Amendment, page 2, line 10, he proposed to insert these words:— But excluding property, the interest in which of the deceased or other persons was only an interest as holders of an office or recipients of the benefits of a charily or as a corporatus sole."

SIR R. WEBSTER

observed that the Amendment of his hon. Friend had been down some days, but they had only just heard the words of the Amendment of the Solicitor General. It seemed to him, as he caught the words, that they were satisfactory, although, not having seen them, they could not judge of them absolutely.

MR. BYRNE

expressed himself satisfied with the Amendment of the Solicitor General.

Amendment (The Solicitor General) agreed to.

MR. BARTLEY moved, in page 2, line 10, at end, to add— Provided that this shall not apply to leases for lives of which the deceased was one life. He said, that leases for life were very common, particularly in Cornwall. Although condemned by a Committee of this House some years ago, a great number still existed. The name of some well-known personage was put into these leases, such as the Prince of Wales, and on the death of the person named in the leases, a large quantity of property might change hands. He claimed that these were annuities and reversions. They would fall under the purview of the Bill, and would be called upon for the Death Duties when they collapsed either as reversions or annuities, and they had, therefore, no right to be charged in any sense in this way. The persons concerned were really the owners of the properties. They were let on this system, the individual named in the lease had nothing whatever to do with the property, and on his death there should be some exemption by which the properties should not be seized upon for Death Duties. The Amendment of the hon. and learned Member for South Hackney did not in any way touch leases for life because the deceased in no way benefited by them, but was simply named in the lease for the benefit of other persons. They were altogether departing from the principles upon which the Death Duties were founded, and were imposing taxation on a system altogether apart from Death Duties, but merely arising from an individual being named in the lease. This raised so serious a question that it was absolutely necessary something should be done to set it right. He begged to move the Amendment.

Amendment proposed, in page 2, line 10, after the word "person," to insert the words— Provided that this shall not apply to leases for lives of which the deceased was one life."—(Mr. Bartley.)

Question proposed, "That those words be there inserted."

MR. R. T. REID

said, that as he understood the Amendment it was designed with the object of providing that a lease which was for a life should not be subject to Estate Duty it being otherwise free from taxation. The object of the Government was the same as that of the hon. Member. The Government did not think that estates of the nature indicated were those which should be subject to the duties, and they did not wish them to be dealt with as subject to such duties. He hoped that that would be considered a satisfactory answer so far. He had before called attention to the Amendment of the hon. and learned Member for South Hackney at the end of the clause which dealt with—he would not say this particular case, but with cases in which valuable consideration had been given. He would suggest that knowing the object of the hon. Member and the Government was the same the hon. Member for Islington should withdraw his Amendment now and allow the question to be raised at the end of the clause.

MR. BARTLEY

said, the Amendment of the hon. Member for South Hackney was totally different to his. The hon. Member's Amendment said— Nor in respect of property passing under a disposition made bonâ fide for full consideration in money or money's worth wholly for the deceased's own use or benefit, and it, therefore, limited this alteration entirely to the one case where it was wholly, and not even partially, for the deceased's own use or benefit. In the case of these life leases not one farthing was for the benefit or interest of the deceased in any way. When the Prince of Wales died—and he hoped that day was far distant—a great number of these leases would terminate, and it could not be argued that the clause of the hon. Member for South Hackney could possibly apply to them, because that clause said, "wholly for the deceased's own use or benefit." The Prince of Wales had not received one farthing's worth of benefit from them, and never would.

SIR R. WEBSTER

said, he had the greatest admiration and respect for the hon. Member for South Hackney, but he would like to make this remark. They were producing an Amendment here which ought to be considered, and they were relegated to a particular place where a private Member had put down a particular Amendment. The hon. Member for South Hackney might be a Jew, and he (Sir R. Webster) a Samaritan, but it was not because they were to be divided into two herds that the hon. and learned Solicitor General should decline to allow them to have justice done them in the proper place. Nobody denied that they had brought forward a substantial case which must be met. They were very much indebted to the Solicitor General for the favourable way he had considered their Amendments during the last two or three hours, and so promoted the improvement of the Bill and facilitated the discussion. Take the case of Ireland. He believed it was not an uncommon thing in days gone by to insert the landlord's and agent's names when leases of lettings were being granted. As had been pointed out by the Member for Islington, it was a common practice to insert the names of distinguished persons, like the Prince of Wales or the Duke of Wellington, for the simple reason that by publicity it was known when the lives dropped. That being so, the Solicitor General admitted that there was a case to be met, but he said it was covered by the Amendment of the hon. and learned Member for Hackey. He did not think that the hon. and learned Solicitor General would suggest for a single moment that any lawyer or layman reading the language of the Amendment of the hon. and learned Member for Hackney would think it would include the cases designed to be met by the Amendment of the Member for Islington. Take the case of a lease to Brown for the life of Smith, the property passing to the landlord Jones when Smith died. It was said there was no Estate Duty to be charged in respect of property passing under a disposition made bonâ fide for full consideration in money or money's worth wholly for the deceased's own use or benefit. But there would be no disposition at all in that sense. The landlord might have said to the tenant, "I will give you a lease for three lives, the last of which shall be the Duke of Wellington." That being so, they would not get rid of the difficulty by having it postponed. Did anybody suggest that this was not the proper place?

MR. R. T. REID

said, that the Amendment was intended to apply to leases for life which were for valuable consideration. It was suggested that the language of the hon. and learned Member for South Hackney was not applicable to the purpose. The Government agreed that language should be inserted for carrying out that purpose— although they did not think it necessary —and the only question was where it should be put in. What they desired was to have this thing mentioned once and for all, and they considered the proper place for mentioning it was at the end of the clause. Was it not wiser to deal with every kind of valuable consideration together? That was the only point of difference between them.

SIR R. WEBSTER

This is not the case of a valuable consideration at all. In the first place, it is the case of property where the interest passes to another person in consequence of death. I have read every line of Section 2, and I know no other part of Section 2 to which this exception could apply. The exception we are anxious to put in is not dealt with by the Amendment of the hon. Member for South Hackney, and the only place where the exception could be appropriately met is that taken by the Amendment of the hon. Member for Islington.

MR. R. T. REID

said, if they were to accept the Amendment they would again have the words "for valuable consideration" at the end of the clause. It all came to a question in the nature of a commercial transaction.

SIR R. WEBSTER

said, he saw no sub-section to which the proviso need be added except Sub-section (b) of Clause 2, because that was the only case in which words were inserted to which the exception was necessary—thiswas no case of valuable considerations moving either from or to the person whose life was going to drop. The limiting words ought clearly to be added to Sub-section 2, for it would be wrong to insert the proviso at the end of the section where it might be made to apply to other sub-sections to which that proviso had no application. It was not a case of valuable consideration, but a lease for life, whereby other persons had secured an interest dependent upon a life.

MR. MOULTON

said, the hon. and learned Gentleman seemed to think that, because the question to which he referred was one in which no question of valuable consideration could enter, therefore these words were appropriate, and should be added to the clause. If it was intended to evade the tax nothing could be easier to do it than by means of a lease for lives, or for a life, of which the tenant was to be the life, and who paid only a nominal rent. The consequence was, that, to have a general proviso that it should not apply to a lease for life, of which the deceased was one life, would certainly go much too far, and before they could put the clause in order—to except the case to which his hon. and learned Friend referred — they would have to consider very carefully the method of evasion which could be practised under the guise of leases. He quite agreed that the Amendment which stood in his own name did not deal with the ordinary case of a commercial lease, and he called the attention of the Committee to the statement of the Solicitor General that he was quite prepared to except, or see that satisfactorily, this case of an ordinary commercial lease for life was excepted from the Bill. But there was higher legal authority for saying that no special words were necessary for it.

SIR R. WEBSTER

What legal authority?

MR. MOULTON

said, the late Master of the Rolls, who was a high legal authority, decided in more than one case that such things as commercial leases for life were so different to others on all questions of Death, Succession, and Legacy Duties, that they could not he supposed to be included therein. Whether or not that was sufficient to render unnecessary any special words might be a question, but it was quite clear that words like those in the present Amendment could not be admitted without giving an opportunity, under the guise of leases, of evading a great deal of the Death Duties.

*MR. MATTHEWS

remarked that the decision of the late Master of the Rolls on a question of Succession Duty was quite beside the Death Duty. Really the question raised by his hon. Friend was the same question as was raised some hours ago by the right hon. Member for Bodmin. The whole question was whether the Bill was not radically wrong in imposing Estate Duty upon the death of a person who had a casual life and no other interest, ending completely on the death of that person, because on that death the Government said the Estate Duty was to be levied, although the estate of that person did not benefit in any way.

MR. BARTLEY

intimated that he should press his Amendment to a Division. It was, he said, unfortunate that the Bill was managed in this way. They had the Solicitor General, for whom they all entertained the highest respect, but the real rulers and people who settled these matters were the two hon. Members behind him (Mr. Haldane and Mr. Moulton), who were not even Members of the Government. He thought that a Bill of this kind had never before been managed, not by the responsible Government, but by two hon. and learned Members, and it was not an arrangement calculated to be conducive to carrying out the Bill in a way that would satisfy anybody. He protested entirely against the Bill being settled by non-responsible Members of the House. He considered they ought to have the responsible Leader of the House present.

MR. R. T. REID

did not think the observations of the hon. Member were very generous. He (Mr. Reid) was put in the position of answering for the Government because the Attorney General, who was one of the most accomplished conveyancers and one of the greatest lawyers of the day, was at present unable to be in the House because of illness. For his part, he must say he was deeply grateful to his hon. and learned Friends behind him for doing what they could to assist him.

MR. BARTLEY

They are not the Government.

MR. R. T. REID

hoped he need not say more than that.

MR. BYRNE

said, the Bill they were now discussing was a fiscal Bill. One of the Rules laid down in the House of Lords, and never departed from, was that they could not apply to a fiscal Act of Parliament what was sometimes termed a benevolent construction. That was to say, if the Act in terms imposed certain duties upon a subject, if the words of the Act were such as to catch individuals, they must not depart from the letter of the law, and must not adopt a benevolent construction. It was equally true, on the other hand, that they could not bring a subject within the meshes of the net spread by the Legislature unless the words were clear. It was for this reason he sought, by an Amendment he submitted the previous day, to have an exact and precise definition of the property put into this clause. They were not going to have it. They were going to have a clause which said they were to include this, that, or the other. The result of that, of course, was that they must bring up as many exceptional cases as they could possibly think of in the course of the Bill going through the House, and which ought to be excepted, in order that they might take care that the Act was so framed as that it should not include property which really was not intended to be included. There was a definite case before the Committee. It was vain to cite other Acts of Parliament, such as the Legacy and Succession Duty Acts, which were framed on a totally different footing. To say that because certain decisions had been arrived at under those Acts therefore similar decisions would be arrived at under the present Act was quite beyond his comprehension. It could not be so, and they must judge of this Act by the exact words they found in it, and having hit upon a blot they said an exception ought to be made as suggested by the Amendment.

Question put.

The Committee divided: —Ayes 116; Noes 153.—(Division List, No. 76.)

MR. GIBSON BOWLES moved, in page 2, line 11, to leave out paragraph (c). The sub-section set forth that there should be included amongst the property passing on the death of the deceased— (c) Property which would be required on the death of the deceased to be included in an account under Section 38 of the Customs and Inland Revenue Act, 1881. as amended by Section 11 of the Customs and Inland Revenue Act, 1889, if those sections were herein enacted and extended to real property as well as personal property, and the words 'voluntary' and 'voluntarily' and a reference to a 'volunteer' were omitted therefrom; and. That professed to be a definition subsection, but instead of containing a clear definition it contained a number of bewildering references and cross references and alterations in references to other Acts of Parliament; so that the unfortunate persons who had to administer the Act and the persons liable for duty under the Act would, in order to find out the property on which they would have to pay, have to refer to the two Inland Revenue Acts and then adopt them with a difference. The definitions ought to be embraced within the clause, instead of mere references to other Acts of Parliament. He was certain that was the view of the Inland Revenue authorities.

Amendment proposed, in page 2, line 11, to leave out paragraph (c).—(Mr, Gibson Bowles.)

Question proposed, "That the words of the paragraph to the word 'and,' in line 16, stand part of the Clause."

MR. R. T. REID

said, that the clause was intended to include within the operation of the Estate Duty substantially the cases which were included in the Account Act of 1881. The hon. Member had taken objection that the clauses of the Bill were not set out at greater length, and that in some instances instead of definitions references had been given to other Acts of Parliament where that particular information could be found. He did not think that this would give rise in practice to any real difficulties in this case; for though he was no admirer of cross references in Acts of Parliament, they were now dealing with an Act of Parliament that had stood the test of 15 years.

MR. GIBSON BOWLES

reminded the hon. and learned Gentleman that there were variations in the Act of Parliament.

MR. R. T. REID

said, that was true; but the variations were not of a substantial character.

*MR. BYRNE

said, the plan of referring to other Acts of Parliament was, in his opinion, unsatisfactory, because in many cases a considerable amount of doubt as to the construction to be placed upon them existed. Indeed, in the case of one of the Acts referred to there was at the present time an appeal pending, in order to have the opinion of the Court as to the meaning of a particular clause. In the present case they were introducing a measure that would affect a new class of property, and difficulties would be sure to arise as to the exact construction that was to be placed on many of the more important clauses of the Bill, and it was therefore of the utmost importance that those in charge of the measure should set out in the Bill in the fullest and most simple way what they really intended. He must enter a protest against this method of levying taxes—by referring to other Acts of Parliament in a manner which only lawyers could understand.

SIR W. HARCOURT

said, he agreed that legislation by reference was bad, but legislation must be accommodated to the necessities of the House of Commons. If there was a chance of the House of Commons passing an Act setting out all former Acts dealing with these matters it would be a good thing to turn their hand to such legislation, but a great many weeks would be required to discuss such a measure. They had to deal with Acts as they had been administered by referring to them as briefly as possible in the Bill. The hon. and learned Gentleman opposite said there was a case pending in the Courts which involved the interpretation of one of those Acts; but that could be said of any Act of Parliament. There were always cases pending as to the interpretation of Acts of Parliament. Perhaps there was no Statute about the interpretation of which there had been more question than the Statute of Frauds. There had been innumerable cases pending as to that Statute, but that was no reason why its provisions should be set out at length in other measures. The Government were obliged to draft not ideal Acts of Parliament, but Acts which the House of Commons was likely to pass in a reasonable time.

MR. A. J. BALFOUR

said, he should never have conjectured that a subject so intrinsically gloomy as the Death Duties, and a technical discussion so dull as that they had been obliged to enter upon, could have been enlivened with such strokes of humour as the draftsman had found himself able to incorporate. If they looked at it from an artistic point of view, there was something extraordinarily comic in the manner in which the Bill was drawn. It began with a series of general abstract propositions. These had to be defined, and the process of definition began with Clause 2. Clause 2 by itself was quite unintelligible without Clause 18. Clause 1 was defined by Clause 2, and Clause 2 was defined by Clause 18, and when they came to Clause 18 they should probably have to add a new clause to elucidate it. That did not exhaust the comedy of Clause 2, for by the Chancellor of the Exchequer's own confession, the clause which was intended to be a defining clause itself contained abstruse cross references. It contained in one sub-section a reference to an Act which was amended by another Act, which was amended by this Act, and which had still to ho decided upon, apparently, by the Courts of Law. With its references to "voluntary," "voluntarily," and "volunteer," it was the oddest piece of English he had ever read. The Definition Clause would itself require elucidating, and in the interests of the unfortunate individuals who would have to administer the measure in the Inland Revenue, and the less unfortunate solicitors and barristers who would have to deal with it—he trusted with much profit to themselves, whilst preserving the interests of their clients—it would be possible to amend the clause so that it would be understood by those who drew up wills. He still trusted something would be done to turn the section, with the defining Clause 2, into something which approached ordinary secular English which an ordinary Englishman could apprehend.

MR. HALDANE

said, that if the right hon. Gentleman (Mr. A. J. Balfour) would consider what was the language and what were the clauses of the Acts of which he complained he would find that every word of every line, with the exception of slight alterations made by the Government in the present Bill, carried the verbal inspiration of the late Chancellor of the Exchequer, who took the Act of 1881 and reviewed it by virtue of the provisions of the Act of 1889. They had here language that was well understood, and to complain of such language was to neglect the fact that it bore the seal and imprint of the right hon. Gentleman opposite, who passed it under review. This language was now familiar to the Inland Revenue Authorities and to those gentlemen who were pursuing an industrious and he hoped not over remunerative profession. It was language about which they were glad to learn there was only one appeal pending at present.

MR. GRAHAM MURRAY

There is one in the Scotch Courts also.

MR. HALDANE

said, he should think there was at least another one pending in Ireland. Taking it so, here they had language which was well understood. [Laughter.] Well; everything in this world was relative. It bore the imprint of the late Chancellor of the Exchequer, for the alterations made in the language of the existing Acts were very slight. The whole principle of the Bill had been to deal with property passing at the death, and the necessary safeguards had been introduced into the Bill. This was quite consistent with modern Parliamentary procedure.

MR. DARLING

said, it appeared to the Opposition that the Government were not dealing fairly with those persons who would have to pay the duty. There was an ambiguity in the references, and whether that ambiguity was owing to the action of the late Government or of the present Government did not much matter. The question they had to ask the Government, when they deliberately left out the words "voluntary," "voluntarily," and a reference to a "volunteer," was whether they intended to bring in a class of property which had hitherto been exempt from duty; and, if so, what classes of property did they intend to bring in. Would money settled on marriage be liable to duty?

SIR W. HARCOURT

Certainly.

MR. DARLING

asked why it was not so stated in plain words. Was that the only object in view?

SIR W. HARCOURT

No.

MR. DARLING

What other property is included?

MR. R. T. REID

Marriage settlements are included, and settlements for partial consideration.

MR. DARLING

said, the words did not stop short at cases of partial consideration. Were no cases of settlement for total consideration included? He thought the best way to proceed would be to state specifically what was to be included, and omit all reference to what was to be excluded. Here were new Acts of Parliament, one of which was only five years old, and an appeal was pending upon it at this moment. Could it be contended for a moment that to incorporate such Acts was at all the same thing as to refer to so well-established a statute as the Statute of Frauds, which had been in existence some 200 years.

MR. GRAHAM-MURRAY

said, the whole idea and essence of the Customs and Inland Revenue Act of 1889 was voluntary conveyance. It was ridiculous to say that it was a slight change to take out the word "voluntary." The Government were practically introducing a new code; therefore, what it was proposed to do should be clearly stated.

Question put.

The Committee divided: —Ayes 150; Noes 119.—(Division List, No. 77.)

Committee report Progress; to sit again To-morrow.